Highlights from the 20 Most-Searched Stocks Among Financial Advisors: Focus on Earnings and ETFs

The U.S stock market is extending its volatility and is about to close the first month of 2016 in the red, as investors are looking worryingly towards China and oil. On Wednesday, the Federal Open Market Committee reiterated its plans to increase interest rates this year, but expressed concerns about global economic growth. The FOMC did not increase the interest rate, but suggested that a further increase can be expected in March. When we look at the most-searched tickers among financial advisors last week, we also see some signs of concern. For one thing, the list is dominated by large-cap stocks that sport strong fundamentals, which could be a signal of a low appetite for risk. At the same time, for the first time since we have been covering the list of the 20 most searched tickers, four exchange traded funds made the list, which shows that investors might be looking at ways to reduce their volatility (two of the ETFs have considerable exposure to China).

In this article, we are going to take a look at some of the highlights from the list of the top 20 most searched tickers among financial advisors, based on the data provided by Trackstar, the official newsletter of Investing Channel’s Intuition. In addition, we are going to present the information related to the hedge fund sentiment towards the stocks that made it to the list. We assess this metric based on our analysis of equity portfolios of over 700 funds, whose long positions we track as part of our small-cap strategy. Through extensive research, we determined that imitating the 15 most popular small-cap stocks among hedge funds, a retail investor can beat the market by as much as one percentage point per month and generate a double-digit alpha per year over the long-run (see more details here).

As it was during the previous week, Apple Inc. (NASDAQ:AAPL) and Gilead Sciences, Inc. (NASDAQ:GILD) ranked on the first two positions for the week of January 17 to January 23. Apple’s stock gained 4% during the week, as investors were closely watching the stock ahead of the tech giant’s holiday quarter financial report. Yesterday, Apple Inc. (NASDAQ:AAPL) posted those results, for the first quarter of fiscal year 2016, which showed earnings of $3.28 per share, above the $3.23 that was expected, though the revenue of $75.9 billion was below the estimates of $76.54 billion. However, what made investors more concerned was the sale of 74.8 million iPhones, which missed the expectations of 75.46 million units and showed nearly flat growth over the year, which was the smallest growth rate since the launch of the iPhone back in 2007. Apple Inc. (NASDAQ:AAPL)’s stock slid by 7% over the worries of an iPhone sales slow-down, and weaker-than-expected guidance for the current quarter, which includes sales of between $50 billion and $53 billion (analysts were expecting $55.60 billion). Nevertheless, Apple’s financials are strong and the stock is highly popular among institutional investors. Before the earnings release, Blackrock disclosed a 5.7% position in Apple Inc. (NASDAQ:AAPL) and among the investors we track, 133 of them reported long positions in the company as of the end of September, which makes it the second-most popular stock in our database.

On the next page we are going to look at some other companies, as well as ETFs that ranked among the top 20 most searched tickers.

General Electric Company (NYSE:GE) also made it to the top 20 list and ranks as the third most-searched stock among financial advisors. On January 22, the company also reported its financial results for the fourth quarter, posting adjusted EPS of $0.52 on revenue of $33.9 billion. General Electric Company (NYSE:GE)’s EPS managed to beat the consensus estimate of $0.49, but its revenue came in notably lower than the $35.92 billion estimated and from the $42 billion disclosed a year earlier. A week before the results, General Electric Company (NYSE:GE) announced the sale of its home appliances unit to Chinese company Haier in a $5.4 billion transaction.

Earlier this year, the company also disclosed plans to relocate its global headquarters to Boston from Fairfield, Connecticut and sell its offices in Connecticut and Rockefeller Plaza in New York. In addition, General Electric has said that it will cut 6,500 jobs in Europe. Among the funds we track, General Electric is fairly popular, with the number of investors bullish on the stock growing to 74 from 70 during the third quarter of last year. Nelson Peltz’s Trian Partners owns around 90.57 million shares of GE as of the end of September, while Ken Fisher’s Fisher Asset Management holds some 30.85 million shares.

Next in line is an Exchange-Traded Fund, iShares MSCI Emerging Markets Indx (ETF) (NYSEARCA:EEM), which ranked on the fourth spot in the top 20 list. EEM is an ETF that allows investors to gain exposure to emerging markets and has more than $17.69 billion in net assets, with 24.70% of those concentrated in China, followed by South Korea and Taiwan. With the declines registered by the stock markets in China, EEM might be a good solution for investors seeking to invest in the country, but who want to limit the volatility of their investment. The ETF has lost around 9% since the beginning of 2016, outperforming some of the broader Chinese indices, such as the Shanghai Composite Index, which has slid by nearly 25%. The second China-focused ETF that made the list is iShares China Large-Cap ETF (FXI), which ranked on the 16th spot.

The last week was dominated by some pessimistic news and forecasts from the region, with Goldman Sachs saying that despite the drop registered by emerging markets since the beginning of the year, there is more room for equities to fall. Fitch Ratings also said last week that credit ratings in emerging markets might continue to decline.

Among the funds from our database, the sentiment towards EEM is mixed. Ray Dalio’s Bridgewater Associates disclosed holding 36.51 million shares as of the end of September, down by 41% over the quarter. On the other hand, John Burbank’s Passport Capital initiated a ‘Put’ position, holding options underlying 16.76 million shares. Overall, 31 funds among those we track held shares of the ETF at the end of September.

Another tech stock that made the list ahead of its earnings report is QUALCOMM, Inc. (NASDAQ:QCOM). The company also disclosed its results yesterday, which showed a 19% drop in revenue over the year to $5.78 billion last quarter. The company’s adjusted EPS slid to $0.97 from $1.34. For the current quarter, QUALCOMM, Inc. (NASDAQ:QCOM) expects earnings per share between $0.90 and $1.00 and revenue in the range of $4.9 billion and $5.7 billion. The chip-maker also cut its chip shipments forecast for the current quarter, to between 175 million and 195 million units, which represents a drop of about 25% on the year. The decline in chip shipments also signals a slowdown in the sales of iPhones and other devices powered by Qualcomm’s chips. Among the funds from our database, 68 reported long positions in QUALCOMM, Inc. (NASDAQ:QCOM) as of the end of the third quarter, amassing 7.8% of the company, versus 69 funds that held shares a quarter earlier.

Finally, another ETF that made the list is iShares MSCI Italy Index (ETF) (NYSEARCA:EWI), whose shares have slid by 13% since the beginning of the year. EWI has $874.64 million in net assets and allows investors to gain exposure to a wide list of Italian companies, such as Intesa Sanpaolo or Eni, which represent around a quarter of the ETF. One of the possible reasons why this ETF captured the attention of financial advisors was the announced visit of Iranian president Hassan Rouhani to Italy. Rouhani’s trip to Europe, following the lifting of sanctions on Iran, also includes stops in France and Germany, but earlier this week, Rouhani signed a number of trade deals in Italy, worth around $18 billion in aggregate.

On the next page, you can see the whole list of the 20 most searched tickers by financial advisors last week.